Business & Real Estate

Aerojet to eliminate 1,100 local jobs, stop manufacturing in Rancho Cordova

Rancho Cordova-based Aerojet Rocketdyne Inc. on Monday said it will eliminate or relocate 1,100 of its 1,400 local jobs and shut down manufacturing operations by the close of 2019.
Rancho Cordova-based Aerojet Rocketdyne Inc. on Monday said it will eliminate or relocate 1,100 of its 1,400 local jobs and shut down manufacturing operations by the close of 2019. Sacramento Bee file

Rancho Cordova’s nearly 70-year run as a hub of the aerospace industry will soon end.

On Monday, Aerojet Rocketdyne Inc. announced that it would relocate or eliminate about 1,100 of its 1,400 local jobs over the next 2  1/2 years and shut down manufacturing operations in the area. The company also said it would close its facility in Gainesville, Va.

Rocket engine manufacturing will be consolidated in a new plant in Huntsville, Ala. In all, 800 jobs will be added in Huntsville by the end of 2018.

The company said defense-related program management, engineering and related support positions in Sacramento will be moved to Huntsville by the end of 2018. The majority of the remaining local programs and support positions will be relocated to the company’s space headquarters in Los Angeles.

The 300 employees who will remain in Rancho Cordova will work in finance, legal, personnel and other departments, company spokesman Glenn Mahone said. He did not know how many jobs would leave the area in 2017.

Mahone said Aerojet remains committed to developing its sprawling, 6,000-acre property in eastern Sacramento County, but added, “The timetable has not been totally determined.”

In a statement, Aerojet Rocketdyne CEO Eileen Drake said the company is two years into a consolidation aimed at creating annual costs savings of $145 million when completed in 2019. “Given the dynamic nature of this industry, strategic business decisions such as these, while difficult, are critical to establishing a solid course for our future,” she said.

The job cuts will close out a major chapter of Aerojet’s long history in the Sacramento area.

Aerojet’s local rocket engine-building operations date back to 1951. At its peak in 1963, amid the space race, Aerojet employed nearly 20,000 locally, according to Mahone.

Monday’s announcement stunned Rancho Cordova Mayor Donald Terry, who called it “really disappointing.”

“They’ve got a long history with our city … a long history of good-paying jobs,” he said.

The news follows Verizon’s decision last fall to eliminate 1,000 call-center jobs in Rancho Cordova, but Terry said he remains confident the city can bounce back: “We’re optimistic that we’re going to replace those jobs at Verizon, and these jobs (at Aerojet), too.”

Terry noted that Blue Shield moved 800 back-office jobs into Rancho Cordova last year. Terry said he’s also confident that Aerojet will move forward on its real estate development, a project that’s been in the works for years. The city has signed off on the development of 12,000 housing units in one of Aerojet’s planned subdivisions, Rio del Oro.

“They have the permits,” Terry said. “They're moving forward, we believe, with their plans.” He said it could be a year or so before construction begins, however.

Economist Jeff Michael of the University of the Pacific said the news wasn’t shocking, in light of Aerojet’s decision to move its corporate headquarters to Southern California last year. He also noted that Aerojet has spent the past few years trying to turn much of its idle land in Rancho Cordova into a series of housing developments.

He added: “They’re a shadow of what they used to be in the Sacramento economy but still one of the largest manufacturing employers, a long-time anchor in the economy. That’s certainly a large blow to the Sacramento economy. Anytime you’re talking about 1,000 or more jobs, especially when you’re talking about industrial jobs, they’re high-paying.”

In May last year, Aerojet announced that it was moving its Rancho Cordova-based headquarters to the Los Angeles County city of El Segundo. At that time, the company stressed that only a handful of officials would be involved in the move, with local operations remaining intact in the Sacramento area. Mahone said then that the main reason for the move was to position the company’s headquarters among “the largest concentration of aerospace companies in California. … That’s where the majority of our customers are.”

Asked then if the corporate HQ move was a precursor to moving the company’s Rancho Cordova operations to Southern California, Mahone said, “No, not at all.” He added: “The facility at Rancho Cordova is a plant, an operating plant. We have engineers there. We build there.”

Monday’s announcement wasn’t the first time Rancho Cordova has been told it’s losing most of Aerojet’s operations. In 2000, the company’s parent at the time, GenCorp Inc., announced plans to sell most of Aerojet’s manufacturing business to United Technologies Corp.’s Pratt & Whitney subsidiary.

The deal would have shipped most of the Rancho Cordova factory jobs to San Jose and West Palm Beach, Fla. When the sale fell apart, the Rancho Cordova business gained a reprieve.

Yet Rancho Cordova’s operations remained vulnerable, even after Aerojet bought Rocketdyne’s business from Pratt & Whitney and solidified its standing in the aerospace business. In 2015 the company embarked on a major cost-cutting program that called for the elimination of 500 jobs. About half of those jobs were in Rancho Cordova.

During the company’s heyday, Aerojet operated around the clock and opened a swimming pool, summer camp for employees’ children and a company store that sold everything from golf clubs to refrigerators. President Lyndon Johnson once stopped in for a pep talk to the workers, as did U.S. astronauts Frank Borman and Neil Armstrong, the first man on the moon.

Mark Glover: 916-321-1184, @markhglover